TD Bank delivered a record quarter in Q3 2012, reflecting strong retail and wholesale earnings.
“Growth was driven by record retail earnings and a significant improvement in wholesale earnings,” says Ed Clark, president and CEO. “Our dividend increased by 5 cents per common share and our payout range rose by 40%-50% of adjusted earnings.”
He adds, “This marks our second dividend increase this year, with our fiscal 2012 dividend going up by 11%.”
The bank’s wealth and insurance division delivered net income of $360 million, up 3% from Q3 2011. Lower transaction revenue in wealth was offset by increases in fee-based revenue from asset growth.
In its insurance business, revenue increases from premium growth—and the inclusion of MBNA—were more than offset by adjustments to reserves for claims liabilities and higher claims from weather-related events.
TD Ameritrade contributed $56 million in earnings to the segment, up 17% over 2011.
“We are gaining market share in wealth, and fee-based revenue remains solid,” says Mike Pedersen, group head of wealth management, insurance, and corporate shared services. “The insurance business has been strong due to good premium growth.”
TD’s Tier 1 capital ratio was 12.2% in the quarter and capital quality remained high. TD continues to exceed the 7% common equity tier one Basel III requirement.
Canadian personal and commercial banking posted a record quarter, with reported net income of $864 million. Adjusted net income was $889 million, up 12% from Q3 2011.
“We expect the low interest rate environment and slower economic growth to be a challenge going forward,” says Tim Hockey, group head of Canadian banking, auto finance, and credit cards.
Wholesale banking posted net income of $180 million for the quarter, a 61% increase over 2011. It was due to higher trading-related revenue and improved fixed income and credit trading.
U.S. personal and commercial banking delivered solid earnings, with reported net income of US$279 million. On an adjusted basis, net income was US$355 million.
“Strong core volume growth helped mitigate the impact of the Durbin Amendment for TD Bank,” says Bharat Masrani, group head of U.S. personal and commercial banking. “We’re on track to open 35 new stores this year.”